Roth IRA Mistakes, Part 2: EDU #2602

Jan 14, 2026

Dive into the nuances of Roth IRA mistakes, exploring the critical differences between direct and indirect rollovers. Learn why the one-per-365-day limit is essential and discover the potential pitfalls of 401(k) withholding rules. Tune in for insights on the importance of accurate beneficiary designation forms to avoid probate issues. The discussion also covers inherited Roth withdrawals under the SECURE Act, and strategies for leaving Roth accounts to heirs, ensuring tax-free growth.

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INSIGHT

One-Per-365-Day Rollover Rule

The one-per-365-day limit applies to IRA-to-IRA indirect rollovers, not calendar-year counts.
That rule can trigger taxes if you misuse 60-day rollovers across IRAs within 365 days.

ADVICE

Prevent Pro Rata Problems

When using a backdoor Roth, avoid having pre-tax money in any traditional IRA to bypass the pro rata rule.
Cleanly convert after-tax contributions by keeping traditional IRAs empty before conversion.

ADVICE

Keep Beneficiaries Up To Date

Complete and regularly review beneficiary designation forms for all retirement accounts.
Avoid naming your estate as beneficiary to prevent probate, creditor claims, and delays for heirs.

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Chris’s Summary
Jim and I continue last week’s EDU discussion on Roth IRA mistakes from an Investopedia article. We cover direct versus 60-day rollovers, the one-per-365-day IRA-to-IRA limit, and the 401(k) 20% withholding rule with the RMD and NUA exceptions. We revisit backdoor Roth mechanics and the pro rata rule, then shift to beneficiary designation forms and why naming an estate creates probate and creditor issues. We close with inherited Roth withdrawal timing under SECURE Act rules and the 10-year window.

Jim’s “Pithy” Summary
Chris and I pick up where last week’s EDU episode left off, using the Investopedia Roth mistakes article as a launching point to correct what they compress or misstate. The rollover section is where people get hurt, because they describe the old IRA rule like it was “once per calendar year,” and it wasn’t. It’s a 365-day framework, and the one-per-365-day limit still matters when you do the “show me the money” version of a rollover. I also keep pushing back on indirect rollovers from a 401(k), because the 20% withholding isn’t optional. There are narrow exceptions—but those aren’t general flexibility, they’re specific rules people routinely misunderstand.

The other item that’s far more important than its position on the list is beneficiary designation forms. These accounts pass by beneficiary form first, not your will, which can create probate delays, attorney fees, and creditor complications for the people left to sort it out. Chris adds the practical version of the same mistake: circumstances change, paperwork doesn’t. Old beneficiaries stay on file, and the form controls the outcome even when it creates an awkward situation.

We also get into inherited Roth timing under the SECURE framework—who qualifies as an eligible designated beneficiary, what the 10-year window actually requires, and why Roths don’t fit the required beginning date logic the way traditional accounts do. That difference matters when you’re thinking about flexibility for heirs and how long the account can sit untouched. If the real goal is the zero in the 2-1-0 Tax Ordering Number, the logic behind leaving a Roth can look very different than what you’d conclude from a short listicle about Roth IRA mistakes.

Show Notes: Article – 11 Mistakes to Avoid With Your Roth IRA

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